According to the 'Evening Standard', the Tube driver who put a poster of the British monarch on an office wall was suspended after the other worker accused him of creating a "hostile" working environment.
The picture and another the driver put on his desk has now been removed while an investigation is carried out.
His union representative branded the removal of the pictures "bizarre" and demanded that the decision be reversed.
Long-running animosity between the two drivers is thought to have come to a head over the pictures.
The framed A4-sized poster and the desk portrait had been displayed for around a year at their shared offices in Loughton, Essex.
They were removed on Friday and have not been returned.
The complainant is a member of the RMT union, while the suspended driver belongs to rival union Aslef.
A source told the newspaper that the men have vastly differing political allegiances, which had added to the toxic atmosphere between them.
The suspended driver's union representative called the decision to remove the pictures "extraordinary".
However the complainant said the dispute was not solely about images of the Queen, but was part of a much wider case against the other driver including allegations of bullying and intimidation.
Peter McNaught, London Underground's operations director responsible for the particular line, said: "Following a dispute between two members of staff on the Central line, a full investigation is being carried out by senior managers and a member of staff has been suspended pending the outcome.
"We take all claims of bullying and harassment extremely seriously and do not tolerate such behaviour in the workplace."
London Underground has strong links with the British royal family, with the Queen and Duke of Edinburgh visiting Baker Street last year to mark the Tube network's 150th anniversary.
Meanwhile, tube workers have threatened another strike action over next weekend amid an unrelated dispute over working conditions.
The Unite trade union said 40 technicians in the London Underground power control room are planning to walk out from one minute past midnight next Saturday until May 27th morning.
The technicians, based in Tranport for Londons power control room, are key to providing power to 270 stations in the network.